Call the Market

Understanding Different Wars Waging Within the Feeder Cattle Market

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
If you haven't started to think about your feeder cattle marketing strategy for the year, I'd highly recommend you do so as there's a lot of money on the table this year to capture. (DTN ProphetX chart)

If you've been tracking the feeder cattle market lately, you've noticed the feeder cattle complex is currently torn between two different realities. The market's fundamentals are incredible with supplies historically low and buyer demand extremely high. But as of late, the technical side of the market has shown some exhaustion.

Since the last week of February, the feeder cattle complex has traded either steady to somewhat lower in its current trading range, even though feeders in the countryside are trading higher week in and week out right now.

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One could argue traders should be looking to the market's fundamentals for direction and ultimately trading the market higher because feeder cattle sales have been hot. But when you look at the feeder cattle market's continuous chart, you'll see the market scored an all-time high at $257.38 on Sept. 15, 2023. The market currently is trading at $249.28, just a mere $8.10 lower than the high made last fall.

Which is a great lesson for us as market participants. Just because the market is pulling back and trading steady to somewhat lower at times doesn't mean the market is underperforming. If the feeder cattle complex is only trading $8.10 lower than the all-time high made last fall, the market is maintaining its strength and performing incredibly well given the external pressures that continue to weigh on the greater economy.

As I track and monitor the feeder cattle complex, I'm especially interested to see what comes this spring as green grass is quickly approaching and the demand for grass calves/feeders has already been seen throughout the marketplace. Which leads me to ask: How much more upside could potentially be in this market?

We know the 2024 USDA Market Outlook forecasted feeder steers weighing between 750-800 pounds in 2024 to average $248.50, compared to $218.69 in 2023. This is utterly incredible given that steer prices averaged $56 to $72/cwt more in 2023 than in 2022.

In conclusion, I want to encourage you: The feeder cattle market is primed to be extremely strong in 2024. If you haven't started to think about your feeder cattle marketing strategy for this year, I highly recommend you do so as there's a lot of money on the table to capture. I know it can be frustrating to watch the market trade steady to somewhat lower when you're being told the market is indeed strong. But remember, even bullish markets have down spells. The market is strong, the fundamentals are rich and cow-calf producers need to be positioned to capitalize on this strong market when the opportunity presents itself.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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ShayLe Stewart